World stocks fall ahead of US growth data

Published Oct 26, 2012 09:33am

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The figures were a letdown for investors whose hopes had been bolstered by data Wednesday. — Photo by Reuters/File

BANGKOK: World stock markets fell Friday ahead of the US government's estimate of economic growth in the latest quarter, which is expected to show improvement but not enough to jolt the global economy out of its doldrums.    

Economists expect the government to report growth at an annual rate of 1.8 per cent for the third quarter.

While that would be an improvement over 1.3 per cent in the April-June quarter, it would not be enough to reduce unemployment perceptibly or increase US demand for imports.

The world's No.1 economy was a mainstay of global growth until the 2008 financial crisis. Since then it has grown at a crawl. Europe's debt crisis has added to headwinds while emerging powerhouses such as China have also slowed.

Britain's FTSE 100 fell 0.5 per cent to 5,774.36. Germany's DAX lost 0.5 per cent to 7,163.75. France's CAC-40 shed 0.7 per cent to 3,388.73.

Wall Street was also headed for a fall. Dow Jones industrial futures fell 0.8 per cent to 12,955 and S&P 500 futures lost 0.7 per cent to 1,397.50.

Asian stocks posted losses earlier in the day after data on US housing dimmed hopes of improvement in an industry that is crucial to recovery in the world's No.1 economy.

The National Association of Realtors' index of sales agreements showed Thursday that the number of Americans who signed contracts to buy homes rose only slightly in September from August.

That suggests sales may level off in the coming months after solid gains in the past year.

The figures were a letdown for investors whose hopes had been bolstered by data Wednesday that showed new home sales rose last month to the highest annual pace in the past two and a half years.

Japan's Nikkei 225 index slid 1.4 per cent to close at 8,933.06. South Korea's Kospi tumbled 1.7 per cent to 1,891.43. Hong Kong's Hang Seng shed 1.2 per cent to 21,545.57.

Australia's S&P/ASX 200 lost 0.8 per cent to 4,472.40.

Mainland China's Shanghai Composite Index sank 1.7 per cent to 2,066.21 and the Shenzhen Composite Index shed two per cent to 840.51.

Shanghai-listed Baotou Steel Rare-Earth (Group) Hi-Tech Co., China's top rare earths producer, lost seven per cent two days after announcing it had suspended production in an effort to shore up plunging prices of rare earths.

Investors preferred to book profits on recent gains while waiting for additional data to confirm recent signs that China's manufacturing slowdown may be close to bottoming out.

''The Hong Kong market is at a relatively high level. We need more data to confirm what is our next move, so now it's time for profit-taking,'' said Linus Yip, strategist at First Shanghai Securities in Hong Kong.

Among individual stocks, Kia Motors Corp. plummeted 5.6 per cent after the company reported a third-quarter net profit that was below expectations. The company, South Korea's second-largest carmaker, was hobbled by a labor strike over the summer and weak domestic sales.

Samsung Electronics fell 2.7 per cent, even though the company posted a record third quarter profit as concerns over long-term growth weighed stocks down.

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, jumped three per cent a day after saying its third-quarter profit rose 62 per cent from a year earlier.

Benchmark oil for December delivery was down 90 cents to $85.12 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 32 cents to finish at $86.05 in New York on Thursday, its first rise in four days.

In currencies, the euro fell to $1.2930 from $1.2949. The dollar fell to 79.94 yen from 80.29 yen.


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